Exxaro Tiles Limited - IPO Note

Ceramics / Marble / Granite / Sanitaryware

Exxaro Tiles Limited - IPO Note

Ceramics / Marble / Granite / Sanitaryware

Price range
Rs. 118-120
Issue Period:
Aug 04, 2021
Aug 06, 2021
August 04, 2021

Stock Info

CNX Nifty
Face value (Rs.)
Market lot
Issue size
Rs. 161 cr.
Public Issue
13424000 cr. shares
Market cap post IPO
537 cr.
Equity Pre - IPO
33.55 cr.
Equity Post - IPO
44.74 cr.
Issue type
Fresh issue and offer for sale

Shareholding (Pre IPO)

Source: Ace equity, StockAxis Research

Shareholding (Post IPO)

Source: Ace equity, StockAxis Research

Key Strengths and Strategies

Diversified product portfolio with 1000+ designs:
Over the years, Exxaro has gradually diversified and expanded from being just a manufacturer of frit (one of the raw materials used in tiles manufacturing process) to manufacturing vitrified tiles. The product portfolio consists of 1000+ designs which are categorized based on various series & sizes. This helps Exxaro to cater to diverse needs of different customer segments and capture market share.

Strong marketing set-up with extension of its brand presence:
ETL sells its products under the common brand name of Exxaro. Over the years, it has established a strong distribution network in the domestic and export markets. This reflects in their increasing geographic footprint as well. Domestically the group has a network of more than 1000 distributors & 2000 registered dealers along with unique showrooms spread across India. ETL is further undertaking an elaborate branding campaign to spread the awareness of its brand. The company intends to expand the dealer network in Tier-2 cities, Tier-3 cities and rural areas.

State of the art manufacturing facilities with backward integration:
Exxaro’s manufacturing facilities are fully integrated from raw material handling to finished goods warehousing process, and are equipped with latest key machineries such as Kiln, Press, Digital Printing, Glazing line etc enabling ETL to manufacture various sizes of products, minimize human labour involvement and achieve cost efficiencies. Unit II is one of the single largest plant for manufacturing glazed vitrified tiles under one roof in India. Majority of the key machineries are imported and match international standards

Focus on improving operating efficiencies through technology enhancements:
ETL continuously develops its technology systems to increase asset productivity and improve operating efficiencies. They are also in the process of setting up their own gas station to optimize operating costs such as power & fuel. Power & fuel expenses accounted for ~30% of revenue from operations in FY21. Setting up own LNG gas station for internal consumption will help ETL to improve operating margins.


Exposure to cyclicality in the end-user industry: ETL caters to the real estate, construction, and infrastructure industries. The end-user industries are cyclical, and are strongly correlated to economic cycles. In the past, because of the economic recession, the construction sector faced a slowdown, with several projects getting delayed or cancelled which in turn restrained the performance of the ceramic tiles industry.

High working capital requirements:
The company requires significant amount of working capital for a continued growth. Inability to meet working capital requirements may have an adverse effect on the business operations.

Company Description

Incorporated in 2008, Exxaro Tiles Limited (ETL) is engaged in the manufacturing and marketing activities of vitrified tiles. The company manufactures Double Charge Vitrified Tiles (double layer pigment) and Glazed Vitrified Tiles made from ceramic materials i.e. clay, quartz, and feldspar. Topaz Series, Galaxy Series, and High Gloss Series are some of the well-established products of the company. ETL supplies its products to large infrastructure projects such as residential, educational, commercial, hotels, hospitals, government, builders or developers, religious institutions, etc. It also exports tiles to different countries across the globe. The company has two manufacturing plants, one at Talod and other one at Padra with a combined installed production capacity of 1,32,00,000 sq. mt. per annum. 


Going forward, the company’s strategy is to enhance brand visibility, strengthen product portfolio, and expand dealer network in India as well as globally. ETL management expects its revenue to touch Rs 400 crore in FY22 from Rs 260 cr in FY21, driven by a pickup in construction activity, government schemes for housing & infrastructure, shift from traditional to versatile products and increasing global demand. At the upper price band of Rs 120, the IPO is valued at 26x of FY21 earnings, which looks reasonable considering its peers (Kajaria Ceramics & Somany Ceramics) trade at a much higher multiple. Hence, we recommend SUBSCRIBE to the IPO for long term perspective.

Peer comparison (Rs crore) FY19 FY20 FY21  
Company Revenues EPS ROE (%) Revenues EPS ROE (%) Revenues EPS ROE (%) PE ratio
Exxaro Tiles 242 3 9% 241 3 10% 255 5 12% 26
Kajaria Ceramics 2956 14 16% 2808 16 15% 2781 19 17% 53
Somany Ceramics 1715 11 9% 1610 4 3% 1650 14 11% 53

Key Information

Use of Proceeds:
The offer comprises of a fresh issue and an offer for sale. The total issue size is of Rs 161 crores. Out of the fresh Issue of Rs 134 crores, Rs 50 crores is proposed to be utilized for debt repayment/prepayment, Rs 45 crores to be used for working capital requirements and Rs 39 crores to be used for general corporate purposes. The balance Rs 27 crores of the issue would be through offer for sale by the shareholders and proceeds would go to such selling shareholders.

Book running lead managers:
Pantomath Capital Advisors

The Company is promoted by Mukeshkumar Patel (Chairman & MD), Dineshbhai Patel, Rameshbhai Patel and Kirankumar Patel. MukeshKumar Patel has been instrumental in planning and formulating the overall business & commercial strategy for the company. The Promoters manage and control the major affairs of business operations with their considerable experience in the Industry.

Financial Statement

Profit & Loss Statement:- (Consolidated)

Yr End March (Rs Cr) FY19 FY20 FY21
Net Sales 242.00 241.00 255.00
Material Cost 95.00 71.00 84.00
Employee Cost 29.00 27.00 20.00
Other Expenses 80.00 100.00 104.00
EBITDA 38.00 43.00 47.00
EBITDA Margin 16.00% 18.00% 18.00%
Depreciation & Amortization 14.00 14.00 14.00
EBIT 24.00 29.00 33.00
Other Income 2.00 3.00 5.00
Interest & Finance Charges 18.00 20.00 21.00
Profit Before Tax - Before Exceptional 8.00 12.00 17.00
Tax Expense -1.00 1.00 2.00
Effective Tax rate - 8.00% 12.00%
Net Profit 9.00 11.00 15.00
Net Profit Margin 4.00% 5.00% 6.00%